Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 5PA
Teddy Bower is an outdoor clothing and accessories chain that purchases a line of parkas at $10 each from its Asian supplier, TeddySports. Unfortunately, at the time of the order placement, demand is still uncertain: Teddy Bower forecasts that its demand is
- a. What is the probability this parka turns out to be a “dog,” defined as a product that sells less than half of the
forecast ? [LO13-1] - b. How many parkas should Teddy Bower buy from TeddySports to maximize expected profit? [LO13-1]
- c. If Teddy Bower orders 3000 parkas, what is the in-stock probability? [LO13-2]
- d. If Teddy Bower orders 3000 parkas, what is the expected leftover inventory? [LO13-2]
- e. If Teddy Bower orders 3000 parkas, what are expected sales? [LO13-2]
- f. If Teddy Bower orders 3000 parkas, what is expected profit? [LO13-2]
- g. If Teddy Bower wishes to ensure a 98.5 percent in-stock probability, how many parkas should Teddy Bower order? [LO13-3]
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Students have asked these similar questions
Teddy Bower is an outdoor clothing and accessories chain that purchases a line of parkas at $10 each from its Asian supplier,
TeddySports. Unfortunately, at the time of the order placement, demand is still uncertain: Teddy Bower forecasts that its
demand is normally distributed with a mean of 1800 and a standard deviation of 1000. Teddy Bower sells these parkas at $22
each. Unsold parkas have little salvage value; Teddy Bower simply gives them away to a charity (and also doesn't collect a tax
benefit for the donation). How many parkas should Teddy Bower buy from TeddySports to maximize expected profit? (please use
the normal distribution table and round up to the nearest integer).
A company is planning to purchase 10,000 units of a particular item in the year ahead. The item is purchased in boxes each containing 10 units of the item, at a price of €400 per box. The cost of holding an item in inventory for a year (including insurance, interest and space costs) is 10% of the purchase price. The cost of placing and receiving orders is to be estimated from cost data collected relating to similar orders, where costs of €7,000 were incurred on 25 orders. It should be assumed that ordering costs change in proportion to the number of orders placed. 5% should be added to the above ordering costs to allow for inflation. Assume that usage of the item will be even over the year. Required:
(a) Calculate the economic order quantity (EOQ) in boxes which minimises total costs
(b) Outline when and why it is appropriate to use economic batch quantity (EBQ)
Alina Limited is a manufacturer of widgets orders components for use in manufacturing. The estimated demand for the components during the coming year is 15,000. Order costs are $100 per order; carrying costs are $12 per component. Using the economic order quantity model
What is Alina Ltd’s optimum order quantity?
If the supplier guarantees a three (3) day delivery on any order that is placed, What is the re-order point?
Chapter 13 Solutions
Operations Management
Ch. 13 - Which of the following is NOT true about the...Ch. 13 - A newsvendor orders the quantity that maximizes...Ch. 13 - Prob. 3CQCh. 13 - Suppose the newsvendor model describes a firms...Ch. 13 - Prob. 5CQCh. 13 - Prob. 6CQCh. 13 - A retailer has two merchandizers, Sue and Bob, who...Ch. 13 - Prob. 8CQCh. 13 - Which of the following changes in the in-stock...Ch. 13 - Prob. 10CQ
Ch. 13 - Prob. 11CQCh. 13 - Prob. 12CQCh. 13 - Prob. 13CQCh. 13 - Prob. 14CQCh. 13 - Dan McClure owns a thriving independent bookstore...Ch. 13 - Flextrola, Inc., an electronics systems...Ch. 13 - Monsanto sells genetically modified seed to...Ch. 13 - Fashionables is a franchisee of The UnLimited, the...Ch. 13 - Teddy Bower is an outdoor clothing and accessories...Ch. 13 - Prob. 6PACh. 13 - Goop Inc. needs to order a raw material to make a...Ch. 13 - Geoff Gullo owns a small firm that manufactures...Ch. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Prob. 11PA
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